Did you see the devastating numbers about the wealth of minority families?
Their savings have largely been wiped out. White households now have 20 times more wealth than black households and 18 times more wealth than Hispanic households.
When you consider the large number of minority households in the middle and upper classes, you get a sense of how devastated lower-income families must be to create such an overall disparity.
It's as if we got into a time machine and traveled back to the 1960s, wiping out years of government programs designed to close the wealth gap.
Nearly 50 years after President Lyndon Johnson began the War on Poverty, we are as impoverished as ever.
There are various reasons. But a big one is this: The federal government turned home ownership into an affirmative-action program, complete with quotas. And a lot of people who had no business buying houses bought them and then lost them.
"As sad as it is to say, this began in the Clinton Administration as a response to the argument that the poor and minorities couldn't get credit and were being left out of the home-ownership dream," says James Wright, a sociology professor at University of Central Florida. "They couldn't meet credit requirements. There was a lot of pressure in progressive circles" to change those requirements.
To further this goal, Fannie Mae agreed to buy high-risk subprime loans in 1999. This meant lenders could sell the loans to unqualified buyers and then dump them on Fannie and the taxpayers.
The Department of Housing and Urban Development set a goal that, by 2001, half the portfolios of Freddie Mac and Fannie Mae should be composed of loans to low-income and moderate-income buyers.
Once Freddie and Fannie were fully engaged in the subprime business, the market went crazy. Lenders enticed unqualified and unsophisticated borrowers into signing loans they couldn't possibly pay off.
Republicans try to blame Democrats for all this, but President George W. Bush certainly pushed the agenda. The belief was that home ownership was the key to wealth and neighborhood stability.
The feds kept score, comparing white home ownership to minority home ownership, as if this were some kind of competition.
That all this would fail seems easy to predict in hindsight.
It turns out that credit scores matter, that the ratio of income to mortgage payment matters, that down payments matter, that you can't leapfrog the necessary step of building a financial foundation before buying a house, that not even the government can do an end run around the rules of economic reality.
"I am a knee-jerk progressive liberal kind of guy at heart and hate to admit that when the government entered the private market it screwed things up," says Wright.
Of course, white buyers signed bad loans and got burned. So did affluent buyers and educated buyers and greedy speculators. The contagion spread to all segments of the market.
But the brunt of this disaster fell on the people who could least afford it, enticed by a government that thought it had come up with a shortcut for closing the wealth gap.
This was social engineering run amok.
Low-income neighborhoods have been ruined by foreclosures and boarded-up houses. Investors are buying up this real estate at depressed prices and turning them into rentals. Now all the people who never should have bought homes are back to renting, minus all the money they lost in their homes.
There is only one government program that can narrow the wealth gap — a good education. But for decades the government screwed that up too, excusing failure by socially promoting low-income kids through high school and then dumping them completely unprepared into the real world.
If you expect less of people as children, how can you expect them to compete as equals when they become adults?
Florida began attacking the assumption that low-income kids are too stupid to learn in 1999. It demanded that they pass the same tests as affluent kids, and that they know the basics of reading and math.
Now the demand is that they graduate high school prepared for college.
The goal is to create a generation of homebuyers from scratch, a much better alternative than trying to conjure them out of thin air.
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